Martin Hodula, Jan Janků, Martin Časta, Adam Kučera
This paper tests potential determinants of the development of the insurance sector. Using a rich dataset for 24 European countries spanning two decades, we identify a set of macro-financial factors that are the most robust predictors of growth of gross premiums in the life and non-life insurance sectors. We show that both life and non-life premiums co-move with the business cycle and are positively related to higher savings and a more developed financial system. In addition, we provide new evidence on the role of market concentration and price effects. We find that market concentration matters only for life insurance, whereas the price channel is significant only for non-life insurance. From a policy perspective, our empirical estimates can be used to refine the existing macroprudential stress tests of the insurance sector.
JEL codes: D4, E32, G22
Keywords: Business cycle, insurance, life insurance, macro-financial determinants, non-life insurance
Issued: December 2020
Download: CNB WP No. 8/2020 (pdf, 1.6 MB)